In Brief
This Constitution Bench decision addresses a fundamental principle of tax law: how to interpret ambiguous exemption provisions. The respondents imported Vitamin E50 powder and claimed concessional customs duty based on an exemption notification. The Department denied the benefit, arguing the product did not qualify as animal feed. The Supreme Court was asked to reconsider the 1997 Sun Export case, which had held that ambiguities in exemption provisions should be interpreted to favour the assessee. The Court held that exemption notifications must be strictly construed; the assessee must prove their case falls squarely within the exemption's terms. Ambiguity in exemption provisions benefits revenue, not the assessee—the opposite of ambiguity in tax liability statutes. The Sun Export ratio is overruled. The case is remanded for reconsideration on merits by an appropriate bench.
The lawyer headnote and full judgment text are available to registered users.